Is the Government Tracking Your Credit Card Purchases?

If you thought having your body exposed by an airport screening scan was bad, how would you feel if I told you that the government might be watching your credit card purchases in real time as you make them? What about your airline reservations or even your Sam’s Club Rewards Charge Card? If you think that it couldn’t happen in America, don’t be so sure. After 9/11 the government began prying into the privacy of Americans under the guise of protecting us from terrorists, but with their latest tactics exposed, many are questioning their motives.

One of those questioning is Kevin Bankston, the senior staff attorney at the Electronic Frontier Foundation—a group that was instrumental in persuading a New York court not to allow law enforcement to secretly trace cell phone user’s activities. Bankston is bleak about the future of American’s privacy rights.

“We don’t know what’s coming next,” he told us. “Because of the extensive secrecy surrounding law enforcement and intelligence investigation practices, every new revelation is just that: a revelation, and often a shocking one. ”

It all started when the U.S. District Attorney from New York’s Eastern District entered a court filing requesting that they be granted the right to people’s cell phone location records. In it, they argued that because the government permitted law enforcement officials to secretly spy on the financial dealings of Americans—without them knowing about it—then they should also have that capability. The stunning revelation that the government was covertly spying on its own was quickly followed by an outcry from privacy experts. Once such expert Christopher Soghoian, who runs a privacy blog, decided to find out what he could.

His first attempt at getting the information was denied, so he filed an appeal on the Freedom of Information Act Request from the Department of Justice, and continued to persist in uncovering the information. A year and a half later, the request was finally granted, and the DOJ released a 10-page document that outlined the Fed’s guidelines in spying on the financial transactions of Americans. Here are the highlights:

The act is called “Hotwatch” and in a nutshell means that the government can watch in real time the activity of credit card transactions, airline and hotel reservations, debit card transactions, cell phone calls, and rental car activities of its own citizens.

The Feds don’t have to have a warrant, in fact the DOJ document released to Soghoian stresses that the preferred way to execute a hotwatch is to bypass the protections provided by the Fourth Amendment to the Constitution and instead use a subpoena to order credit card issuers and other retailers to provide detailed real time information about the financial moves of the person being watched. A judge then orders a non-disclosure order, which insures that the target will never know they’re being watched.

No one knows how many of these hotwatches have occurred, or even who exactly the government is spying on. There appears to be no judicial oversight, and Soghoian is convinced that it was the government’s intention to keep the program a secret.

Some say that that the only people who should be worried are those breaking the law, but Bankston points out that “Every time we learn about what legal theories and investigative practices the Department of Justice has dreamed up behind closed doors, they are always more aggressive and invasive than we expected.

We wanted to talk to Christopher Soghoian, the privacy expert who first uncovered this program, to ask him what he thinks Americans should be worried about, and what they should do to protect their financial privacy. But it seems that Christopher is in Indonesia on vacation. Without a phone. Or email.

Who knows, maybe he’s on to something.

This post comes from Tim Chen, CEO and founder of NerdWallet.com, the premier website to help consumers compare rewards credit cards.

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